BILL ANALYSIS Ó SB 1300 Page 1 Date of Hearing: June 28, 2016 ASSEMBLY COMMITTEE ON HEALTH Jim Wood, Chair SB 1300 (Hernandez) - As Amended May 31, 2016 SENATE VOTE: 36-1 SUBJECT: Medi-Cal: emergency medical transport providers: quality assurance fee. SUMMARY: Establishes the Medi-Cal Emergency Medical Transportation Reimbursement Act which assesses an annual quality assurance fee (QAF) on providers of emergency medical transportation (EMT) in accordance with a prescribed methodology beginning on July 1, 2017. and continuing each state fiscal quarter. Applies the QAF to three EMT billing codes. Specifically, this bill: 1)Excludes from the definition of EMTs air ambulance providers, or transportation provided by taxicabs, litter vans, wheelchair vans, or other forms of public or private conveyances, as specified. 2)Requires each EMT provider, on or before August 15, 2016, to report to the Department of Health Care Services (DHCS) data on the number of actual EMTs by payor type, including, without limitation, Medi-Cal fee-for-service (FFS) EMTs and Medi-Cal SB 1300 Page 2 managed care (MCMC) EMTs, and gross receipts from the provision of EMTs provided each quarter from July 1, 2015, to June 30, 2016, in a manner prescribed by DHCS. 3)Requires each EMT provider, commencing with the fiscal quarter beginning on October 1, 2016, and each fiscal quarter thereafter, on or before the 45th day of the quarter, to report to DHCS data on the number of actual EMTs by payor type, as specified, and gross receipts from the provision of EMTs provided in the quarter preceding the quarter in which the report is due, in an manner and format prescribed by DHCS. 4)Authorizes DHCS to establish an Internet Website for the submission of the required reports specified in 2) and 3) above. 5)Permits DHCS to require certification by each EMT under penalty of perjury of the truth of the reports required in 2) and 3) above. Authorizes DHCS, upon written notice to an EMT provider, to impose a penalty of $100 per day that an EMT provider fails to make a report, as specified. Provides that failure to make the report within 90 days of the date upon which the report was due is considered a licensure violation, as specified. 6)Requires, on or before June 15, 2017, and each June 15 thereafter, the DHCS Director to calculate the annual QAF rate applicable to the following state fiscal year based on the most recently collected data collected from EMT providers (See 2) and 3) above), and publish the annual QAF rate on its Internet Website. 7)Prohibits the fees calculated and collected from exceeding the amounts allowed under federal law. Specifies calculations of SB 1300 Page 3 the QAF rate as follows: a) Calculate the QAF rate for state fiscal year (FY) 2017-18 by multiplying the projected total annual gross receipts for all EMT providers subject to the fee by 5.5%, the resulting product to be divided by the projected total annual EMTs by all EMT providers subject to the fee for the state FY; and, b) For state FY 2018-19 and thereafter, the QAF shall be calculated by a ratio, the numerator of which shall be the sum of the product of the projected aggregate fee schedule amount and the effective state medical assistance percentage, and the amount of DHCS staffing and administrative costs not to exceed $350,000, and the denominator of which shall be 95% of the projected total annual EMTs by all EMT providers subject to the fee for the state FY. 8)Requires the DHCS Director, on or before June 15, 2017, and each June 15 thereafter, to publish the annual QAF rate on its Internet Website. 9)Requires the Director of DHCS to adjust the QAF rate, as specified. 10)Requires each EMT provider subject to the fee to remit to DHCS an amount equal to the annual QAF rate on specified timeframes. Authorizes DHCS to assess interest not paid on the due dates at the greater of 10% per annum or the rate at which DHCS assesses interest on Medi-Cal program overpayments to hospitals that are not repaid when due. SB 1300 Page 4 11)Authorizes DHCS, if any fee is more than 60 days overdue to deduct any unpaid fee and interest owed from any Medi-Cal reimbursement payments owed to the provider until the full amount of the fee and interest are recovered. Requires DHCS to give the provider written notification of the deduction which could be deducted over a period of time taking into account the financial condition of the provider. Assesses an additional penalty if a payment is not received after 60 days. 12)Establishes the Medi-Cal Emergency Transport Fund for purposes of the QAF raised in this bill and provides funding for health care coverage, in the following order of priority: a) To pay for the DHCS's staffing and administrative costs for implementation of this bill, not to exceed $350,000 for each FY, exclusive of any matching funds; b) To pay for the health care coverage in each FY in the amount of 10% of the projected quality assurance fee revenue for that FY, as calculated by DHCS on or before June 15 preceding that FY, exclusive of any federal matching funds; and, c) To make increased payments to EMT providers. 13)Increases, effective July 1, 2017, the Medi-Cal FFS payment schedule governing reimbursement to EMT providers for EMTs. 14)Requires DHCS to calculate the projections based on data submitted pursuant to 2) and 3) above. Specifies the payment schedule amounts. SB 1300 Page 5 15)Requires the FFS and MCMC payment schedule increase to be funded solely from the QAF, and federal reimbursement and any other related federal funds. 16)Establishes provisions for delayed payment of the QAF if there is a delay in the implementation of this bill for any reason, including a delay in any required approval of the QAF and the reimbursement methodology. Includes in these provisions retroactive fees and the authority for DHCS to make retroactive payment of supplemental rates. 17)Authorizes the DHCS Director to adopt regulation as are necessary to implement this bill. Authorizes adoption of regulations as emergency regulations, as specified. 18)Requires DHCS to request approval from the federal Centers for Medicare and Medicaid Services (CMS) for the use of fees collected for the purpose of receiving federal matching funds. 19)Authorizes the DHCS Director to alter the methodology to the extent necessary to meet the requirements of federal law or to obtain federal approval. Requires the DHCS Director to execute a declaration if an alteration is necessary. 20)Authorizes the DHCS Director to add categories of exempt EMT providers or apply a nonuniform fee per transport to EMT providers that are subject to the fee in order to meet requirements of federal law or regulations. 21)Implements this bill only under the following conditions: a) The state receives federal approval of the QAF from CMS; SB 1300 Page 6 and, b) The state receives federal approval for the increased FFS payment schedule increases. 22)Ceases implementation of this bill if one of the following conditions is satisfied: a) CMS no longer allows the use of the provider assessment; b) The Medi-Cal FFS payment schedule increase no longer remains in effect; c) The QAF assessed and collected is no longer available; or, d) A final judicial determination by the California Supreme Court or any California Court of Appeal that the revenues collected pursuant to this article that are deposited in the Fund are considered subject to be proceeds of taxes within the meaning of Proposition 98. 23)Makes this bill inoperative in the event of a final judicial determination made by any state or federal court that is not appealed, or by a court of appellate jurisdiction that is not further appealed, in any action by any party, or a final determination by the administrator of the CMS, that federal financial participation (FFP) is not available with respect to any payment made under the methodology implemented under this bill because the methodology is invalid, unlawful, or contrary to any provision of federal law or regulations or of state law. SB 1300 Page 7 EXISTING LAW: 1)Establishes the Medi-Cal program, administered by the DHCS which provides health benefits to low-income individuals who meet specific eligibility criteria. 2)Includes EMT and nonemergency medical transport (NEMT) in the Medi-Cal schedule of benefits. 3)Reduces specified Medi-Cal provider rates, including ground ambulance services effective June 1, 2011, by 10% for dates of service on and after June 1, 2011, subject to specific requirements. Applies the 10% reduction for ambulance providers for dates of service on or after September 5, 2013, but was not applied retroactively back to June 2011. FISCAL EFFECT: According to the Senate Appropriations Committee: 1)Ongoing administrative costs, likely in the hundreds of thousands to low millions per year for DHCS to develop regulations, gain federal approval, make any necessary system changes, oversee collection of the quality assurance fee, and make supplemental payments (special fund, General Fund (GF), and federal funds). This bill provides that $350,000 per year shall be available to DHCS for administrative costs (the state would be able to draw down additional federal funding to help cover the administrative costs). To the extent that actual administrative costs are higher, those costs would be paid from the GF and federal funds. SB 1300 Page 8 2)Ongoing GF benefit of about $3 million per year. This bill provides that 10% of revenue collected (after setting aside administrative funding) shall be available to the state for support of the Medi-Cal program. In doing so, this bill reduces the need for GF support of the Medi-Cal program by an equal amount. 3)Additional payments of about $77 million per year for EMT in the Medi-Cal program (special fund and federal funds). The quality assurance fee is projected to generate about $30 million per year in revenues (after accounting for administration and state benefits). With federal matching funds, there would be about $77 million per year for increased reimbursements to providers. COMMENTS: 1) PURPOSE OF THIS BILL. According to the author, this bill increases Medi-Cal EMT rates by levying a QAF on three EMT reimbursement codes. The resulting revenue would then be used to draw down additional federal Medicaid funds to increase Medi-Cal emergency transportation rates, without imposing a cost to the state GF. In addition, 10% of revenue raised by the QAF would go to the state GF. The author argues inadequate Medi-Cal reimbursement for ambulance transport is a long-standing issue and places a strain on the state's emergency medical services (EMS) system. Unlike other Medi-Cal providers, ambulance providers cannot "opt out" or otherwise limit their participation in the Medi-Cal program the way other nonemergency health care providers can to obtain a more favorable payor mix. While the costs to provide essential ambulance services has significantly increased during the past decade, including SB 1300 Page 9 escalating wages and benefits, and increasing insurance premiums, Medi-Cal reimbursement has not kept pace with these increased costs and has in fact declined to less than the amounts paid in 1999. The QAF proposed by this bill would increase Medi-Cal EMT rates by drawing down federal Medicaid dollars, which will flow back to the state to be used by ambulance providers to maintain the high level of care that is expected of the state's EMS and 911 programs. 2)BACKGROUND. a) Provider Taxes. Federal Medicaid law authorizes states to impose health care-related provider taxes on certain types of health care services (such as inpatient hospital services, nursing facility services, emergency ambulance services and managed care organization) without affecting federal matching funding. Health care-related taxes are defined as a licensing fees, assessments, or other mandatory payments that are related to the provision of, or payment for, health care services or items. In many states, including California, states collect these payments from health care providers to help finance the nonfederal share of their Medicaid expenditures. To be deemed permissible under federal law, health-care related taxes must be: i) Broad based: imposed on all providers within a specified class of providers; ii) Uniform: applied at the same rate for all payers of the tax; and, iii) No hold harmless: the state may not provide a direct or indirect guarantee that providers receive their tax payment back, or be "held harmless" from the tax. Federal rules permit some health care-related taxes that do not meet the definition of being "broad-based" and "uniform." To obtain permission for such a tax, states must formally request a waiver of the broad-based and uniform requirements from CMS, and within the waiver request, demonstrate that the tax structure is generally SB 1300 Page 10 redistributive. However, federal law does not allow for any waiver of the no-hold-harmless requirement. California currently has provider fees on managed care plans, hospitals, skilled nursing facilities and intermediate care facilities for the developmentally disabled. b) Medi-Cal rates for ambulance services. Medi-Cal covers both EMT and NEMT. EMT is provided when necessary to obtain program covered benefits when the beneficiary's medical/physical condition is acute and severe, necessitating immediate medical diagnosis and treatment in order to prevent death or disability. Such transportation does not require prior authorization and is always by ambulance. When billing Medi-Cal for a "911 call," ambulance providers bill a Basic Life Support (BLS) base rate of $106.38. In addition to the base rate, Medi-Cal provides additional funding for additional costs and services, such as mileage, night calls, extra attendants, waiting times, and certain supplies and services. Medi-Cal FFS emergency base ambulance rates were increased in 1997 and 1998 and were last increased in 1999 by 11.7%, to $118.20. Medi-Cal base ambulance rates were reduced in 2008 and again in 2013 (by 10%). The current Medi-Cal base rate is $106.38, a rate that is $11.82 lower than the rate in 1999. c) EMT. This bill imposes a QAF on revenue EMT providers receive from three EMT reimbursement codes, as follows: i) A0429 BLS Emergency. BLS vehicles must be staffed by at least two people, at least one of whom must be certified as an emergency medical technician by the State or local authority where the services are being furnished and be legally authorized to operate all lifesaving and life-sustaining equipment on board the vehicle. An emergency response is one that, at the time the ambulance SB 1300 Page 11 supplier is called, responds immediately or responds as quickly as possible to take the steps necessary to respond to the call. ii) A0427 Advanced Life Support (ALS1) Emergency. ALS1 vehicles must be staffed by at least two people, at least one of whom must be certified by the State or local authority as an EMT-Intermediate or an EMT-Paramedic. iii) A0433 ALS 2 - ALS2 is the transportation by ground ambulance vehicle and the provision of medically necessary supplies and services including: 1) at least three separate administrations of one or more medications by intravenous push/bolus or by continuous infusion (excluding crystalloid fluids) or 2) ground ambulance transportation and the provision of at least one of the ALS2 procedures: Manual defibrillation/cardioversion; Endotracheal intubation; Central venous line; Cardiac pacing; Chest decompression; Surgical airway; or Intraosseous line. d) QAF rate. This bill assesses a QAF on revenue EMT providers receive from three EMT reimbursement codes as specified above. A QAF rate of 5.5% is assessed for 2017-18 against the gross revenue of all EMT providers from the three reimbursement codes. After 2017-18, estimates of the QAF rate provided by the 911 Ambulance Provider's Medi-Cal Alliance, the sponsor of this bill, are as follows: for 2018-19 the QAF would be at 5.7%; for 2019-20 it would be 5.8%; and for 2020-21 and beyond, the rate would be at 5.9%. The increase in the QAF rate is needed to account for the reduction in the federal match (known as the Federal Medical Assistance Percentages or FMAP) for certain populations including adults who became eligible for Medi-Cal under the optional expansion enacted under the federal Affordable Care Act. 3)SUPPORT. The 911 Ambulance Provider's Medi-Cal Alliance, the sponsor of this bill, and the Emergency Medical Services SB 1300 Page 12 Administrators Association of California, state that this bill provides financial relief to public and private ambulance providers who have been impacted by 18 years of a growing divide between the cost of providing emergency ambulance services and the cost of providing care to patients. 4)RELATED LEGISLATION. AB 1257 (Gray) would have required DHCS to establish payment rates for ground ambulance services based on changes in the Consumer Price Index-Urban and the California weighted average Geographic Practice Cost Index, and would have designated the ambulance cost study conducted by the federal Government Accountability Office as the evidentiary base. AB 1257 was held on the Assembly Appropriations Committee suspense file. 5)PREVIOUS LEGISLATION. a) AB 2577 (Cooley and Pan) of 2014 would have authorized governmental entities to make intergovernmental transfers as the non-federal share of expenditures for ground EMT services for purposes of drawing down federal Medicaid matching funds. AB 2577 was vetoed by the Governor. b) SB 1374 (Hernandez) of 2013 would have required DHCS, by July 1, 2015, to adopt regulations establishing the Medi-Cal reimbursement rate for ground ambulance services using one of two specified methodologies. SB 1374 was held on the Senate Appropriations Committee suspense file. c) SB 359 (Hernandez) of 2011, was similar to SB 1374 in that it would have required DHCS, by July 1, 2012, to adopt regulations establishing the Medi-Cal reimbursement rate for ground ambulance services using one of two specified methodologies. SB 359 was held on the Senate Appropriations Committee suspense file and was gutted and amended and used for another purpose. d) AB 678 (Pan), Chapter 397, Statutes of 2011, establishes a supplemental payment program for governmental entity SB 1300 Page 13 providers of Medi-Cal EMT services, based on certified public expenditures using state or local governmental entities' funds as the required federal match. e) AB 2173 (Beall), Chapter 547, Statutes of 2010, establishes a $4 penalty on every vehicle code violation. The resulting revenue would be matched by federal funds and used to make supplemental payments for emergency air medical transportation services in the Medi-Cal program. f) AB 1932 (Hernandez) of 2010, in its final form, would have authorized DHCS to utilize certain service levels for purposes of determining billing codes for emergency and nonemergency basic life and advanced life support transportation and specialty care transportation. If DHCS used the service levels to determine billing codes, AB 1932 would have required DHCS to adopt the definitions and Healthcare Common Procedure Coding System codes for those service levels that have been established by CMS, and to determine the above described billing codes in a revenue-neutral manner. AB 1932 was held on the Senate Appropriations suspense file. g) AB 1174 (Hernández) of 2009 would have required Medi-Cal to cover emergency BLS and advanced life support services when a patient reasonably believes that without immediate medical attention, a serious health condition, as specified, could reasonably result. In addition, AB 1174 would have increased and established in statute maximum Medi-Cal reimbursement rates for ambulance transportation services, and would have required the rates be adjusted to reflect changes in the California Consumer Price Index. AB 2257 (Hernandez) of 2008 was similar to AB 1174, except that AB 2257 would have also increased Medi-Cal rates for air ambulance providers. AB 1174 and AB 2257 were both held on the Assembly Appropriations suspense file. h) AB 511 (De La Torre) of 2010 would have imposed, as a condition of participation in the Medi-Cal Program, a QAF SB 1300 Page 14 on certain ambulance transportation services providers, to be administered by DHCS. The proceeds from the QAF would be required to be deposited into the Medi-Cal Ambulance Transportation Services Providers Fund (Fund). Moneys in the Fund would be available only to enhance FFP for ambulance transportation services under the Medi-Cal program, or to provide additional reimbursement to, and to support quality improvement efforts of, ambulance transportation services providers, including increased reimbursement for and improvement of the quality of the provision of advanced life support services, as defined. AB 511 died in the Senate. i) AB 1153 (Beall) of 2009 would have levied an additional penalty of $3 upon every fine, penalty, or forfeiture imposed and collected by the courts for all offenses involving a vehicle violation, except certain parking offenses, in each county. The resulting revenue would be transferred to the state and continuously appropriated to DHCS solely for the purposes of augmenting Medi-Cal reimbursement paid to emergency air medical transportation services providers. DHCS would be required to use the moneys in the Emergency Air Medical Transportation Act Fund and federal matching funds to increase the Medi-Cal reimbursement or supplemental payments for emergency air medical transportation services in an amount not to exceed normal and customary charges charged by the emergency air ambulance transportation services provider. AB 1153 was held on the Senate Appropriations suspense file. 6)AMENDMENTS. This bill requires EMT providers to report to DHCS on or before August 15, 2016, data on their transports to be used to calculate the QAF. To give DHCS sufficient time to determine the manner and format of reporting the data, this timeline needs to be adjusted. Additionally, the author is proposing to delete penalty provisions for failure to submit the report. 14129.1. SB 1300 Page 15 (a) On or beforeAugust 15, 2016November 15, 2016 , each EMT provider shall report to the department data on the number of actual EMTs by payor type, including, without limitation, Medi-Cal fee-for-service EMTs and Medi-Cal managed care EMTs, and gross receipts from the provision of EMTs provided in each quarter from July 1, 2015, through toJune 30, 2016October 31, 2016 , inclusive, in a manner and format prescribed by the department. (b) Commencing with the fiscal quarter beginning onOctober 1, 2016January 1, 2017 , and each fiscal quarter thereafter, on or before the 45th day of the quarter, each EMT provider shall report to the department data on the number of actual EMTs by payor type, including, without limitation, Medi-Cal fee-for-service EMTs and Medi-Cal managed care EMTs, and gross receipts from the provision of EMTs provided in the quarter preceding the quarter in which the report is due, in a manner and format prescribed by the department. (c) The department may establish an Internet Web site for the submission of reports required by this section. (d) The department may require a certification by each EMT under penalty of perjury of the truth of the reports required under this section. Upon written notice to an EMT provider, the department may impose a penalty of one hundred dollars ($100) per day against an EMT provider for every day that an EMT provider fails to make a report required by this section within five days of the date upon which the report was due.If an EMT provider has not made a report as required by this section within 90 days of the date upon which the report was due, the failure to make the report shall be considered a violation of a section of the Vehicle Code that relates to the EMT provider's licensed activities for the purposes of Section 2542 of the Vehicle Code.REGISTERED SUPPORT / OPPOSITION: SB 1300 Page 16 Support 911 Ambulance Provider's Medi-Cal Alliance (sponsor) Alameda County Board of Supervisors American Ambulance California Fire Chiefs Association California Professional Firefighters Emergency Medical Services Administrators Association of California Fire Districts Association of California Gold Coast Ambulance McCormick Ambulance Mercy Medical Transportation Napa County Board of Supervisors Paramedics Plus SB 1300 Page 17 Opposition None on file. Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916) 319-2097